SCHULTZ: "The Washington Post" reports national Democrats aren`t helping the state party in Wisconsin. Mike Tate of the Wisconsin Democrats is here to tell his side of the story.

UNIDENTIFIED MALE: Bain Capital walked away with a lot of money that they made off this plant. We view Mitt Romney as a job destroyer.

SCHULTZ: The victims of vulture capitalism are speaking out in a new Obama campaign ad. We`ll speak to one of them tonight.

And JPMorgan $2 billion mistake proves Republicans just don`t get it.

UNIDENTIFIED MALE: You think we need less financial regulation rather than more?

REINCE PRIEBUS, RNC CHAIRMAN: I think we need less.

SCHULTZ: Bart Chilton of the Commodities Future Trading Commission on the regulation we need to stop another disaster.

(END VIDEOTAPE)

SCHULTZ: Good to have you with us. Thanks for watching.

A new video of Scott Walker telling a billionaire donor about his plan to divide and conquer labor might land him in hot water with the United States Congress. The video of Walker talking with billionaire Diane Hendricks in January of 2011 surfaced in a documentary late last week.

Take a look.

(BEGIN VIDEO CLIP)

DIANE HENDRICKS, CAMPAIGN DONOR: Any chance we`ll get to be a completely red state and work on these unions and become a right to work? What can we do to help you?

GOV. SCOTT WALKER (R), WISCONSIN: We`re going to start in a couple of weeks with our budget adjustment. The first step is we`re going to deal with collective bargaining for all public employee unions because you use divide and conquer.

(END VIDEO CLIP)

SCHULTZ: The video is a damning look inside the governor`s head and agenda less than one month before he staged an all out assault on public workers in Wisconsin. At the time, Walker repeatedly lied about his reasons for gutting the public sector. His biggest lie happened during congressional testimony in April of 2011.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Have you ever had a conversation with respect to your actions in Wisconsin in using them to punish members of the opposition party and their donor base?

WALKER: No.

UNIDENTIFIED MALE: You`ve never had such a conversation?

WALKER: No.

(END VIDEO CLIP)

SCHULTZ: Let`s go back and take yet another look at what the he told billionaire donor three months earlier.

(BEGIN VIDEO CLIP)

WALKER: The first step is we`re going to deal with collective bargaining for all public employee unions, because you use divide and conquer.

(END VIDEO CLIP)

SCHULTZ: Oh, yes, it`s so interesting, isn`t it?

Walker used his divide and conquer strategy to punish unions and anyone that stood in his way.

Congress, you know you ought to do, you ought to haul this guy back. He`s got plenty of attorneys. He`s got help. Ask him the question again. His defense team might help him along on this one and bring him along a little bit.

This is part of the reason why this is the most important election in America. The Wisconsin gubernatorial recall election will have a major impact on every race in America for generations to come. The June 5th recall election is the first real first test case of Citizens United versus boots on the ground.

Scott Walker has been all over conservative media begging for money. The rookie governor has already raked in more than $25 million to smear his opponents and pumped his weak record of job creation.

Walker raised 12 times more money than all four Democrats who competed against one another in the primaries. Tom Barrett and the Democrats -- they`re going to need all hands on deck if they pull this off and see Walker go down the trail.

That`s why this headline -- I`m scratching my head when I saw this. Greg Sargent points occupant the Wisconsin Democratic Party has asked the DNC for $500,000 to help out with their field operation. So far the DNC has declined.

I have a question for my friends at the DNC -- what in the hell are you waiting for?

Democrats have less than 22 days to get boots on the ground, get organized again, get people registered and get them out to the polls. There`s no time to waste, wouldn`t you say?

When Howard Dean ran the DNC, he had a 50 state strategy which help get Nancy Pelosi the speaker`s gavel and, of course, helped President Obama win nine Bush states. I think that`s how it went down -- a national effort.

I think it`s unacceptable for the national party to sit this one out. Financially, it`s all about writing the check.

Walker has the support of -- who? Well, the Republican Governors Association, Americans for Prosperity, the Koch brothers, Sheldon Adelson, and all the free time he can gin up on FOX News and conservative talk radio all across America. Why is that? Because they want him to win. They`re in it to win. The conservatives and the righties understand what Wisconsin means.

This is where it all started. Sixteen months ago, it went from protests to petitions to nine recall elections and the Democrats won five. But now, we`re down to the big one. This is the big one.

And can you believe it? The DNC is getting writers cramp when it comes to writing a check for 500 grand. Have you ever been in business? Gosh, I rate writing this check, but I got to do it.

DNC, you got to write it if it pains you, because this has really national implications as to what can happen to this country. If we don`t take stand against Citizens United, if we don`t give the people hope, if we don`t give them the confidence that you can win, what does it say? Is there any other bigger election that`s going to happen between now and June 5th? I don`t think so.

This has been on the radar screen for 16 months. So, the righties are all in, but the DNC is -- well, I don`t know about the 500 grand.

End this story tonight. Pick up the phone, you folks at the DNC. I won`t name names because I`m not looking to pick a fight, OK? I`m here to motivate and make people understand what this means because if Walker wins, if his agenda is allowed to prevail and the 14 senators that left the state to draw attention to what was a radical plan, if they lose this battle at the polls, after all of this, this is going to underscore every other Republican governor in this country saying -- well, see that? The people may be protesting and saying one thing but this is what we have to do if we`re going to get our budget in order.

I`m asking Ed heads across America, you know what to do. The DNC needs to step up and get it done for a candidate who will do a better job than Scott Walker.

Now, Tom Barrett -- OK, he`s not the media darling when it comes to the media in this country. He`s not the media darling when it comes to unions in this country. But he is the guy that is going to be much more level headed and restore the education cuts that have taken place in this state and also will do a better job of job creation.

I do think that the Congress needs to call Scott Walker back and play those two sound bites. It probably won`t happen because you see, Darrell Issa calls the shots. If you`ve been seeing what Darrell Issa says about President Obama and Joe Biden and the Obama administration -- I think you know just how he plays. He plays to win.

Democrats, put it on the calendar. This is one we cannot lose. Get your cell phones out, I want to know what you think.

Tonight`s question: Do national Democrats need to do more to help recall Scott Walker? Text A for yes, text B for no, to 622639. And you can go to our blog at Ed.MSNBC.com and leave a comment. We`ll bring you results of the poll later on in the show.

Joining me tonight is a gentleman who`s in a tough spot, Mike Tate. He`s the chairman of the Wisconsin Democratic Party. I know him. He`s a good guy. He works hard, but he needs the cash.

And these folks have asked the DNC to step up. Right now, it seems like, financially, they are on an island.

Mike, good to have you with us.

I want to know -- what`s happening with this story? How true is it? Is it 500 grand? What do you need to get the boots on the ground to get organizing to make this thing happen?

MIKE TATE, WISC. DEMOCRATIC PARTY: Well, Ed, thanks for having me on.

And let me say that, you know, we`ve been working with folks like the DNC and the DGA from the beginning on this race. I think everyone is clear this is a priority. I believe, as you just said, that this is the most important election in America right now and will be the most important thing before we hopefully re-elect the president in November.

The DNC has been helping us mobilize their volunteers and are going to be very active here. The Democratic Governors Association has been spent millions of dollars here on television.

So, you know, we are continuing to work in partnership with our friends at the DNC and are hopeful it will continue that strong partnership and make a good financial investment here.

SCHULTZ: Is the story accurate? So far, they have not written the check that you`ve asked for.

TATE: Well, you know, we`re still talking about that. Ed, I`m a little reluctant to talk about specific numbers for campaign strategy publicly. But we`re working with them on a regular basis.

I think that they know that this is an incredibly important bellwether election that if we`re able to defeat Scott Walker here in Wisconsin, it`s going to make it a lot easier for Barack Obama to win 270 electoral votes in November.

SCHULTZ: OK. If you`ve asked for $500,000 and the DNC doesn`t deliver, what does that tell other progressives around the country? You`re on your own and have to take care of your own backyard?

That`s not how the Republicans and the conservatives and the Koch brothers are operating. I mean, there`s outside interest that are playing to win right now.

So, can Barrett win without the help of the national party?

TATE: Well, we need all the help we can get. And, you know, we`ve had hundreds of thousands of people give $5, $10 and $20. This really is how we fight back against the powerful and the elite in a post-Citizens United era. We would love to have the help of the DNC. It will continue to add to the help they are providing us from an on-the-ground perspective.

SCHULTZ: It`s all about the money, though, Mike. It`s all about the money.

You know it. I know it. Everybody knows it. And that`s why millions of dollars have flowed in to support Scott Walker.

So, the bottom line here is the DNC can`t step up to the plate and not get the writers cramp and write the check, it`s all for naught, isn`t it?

TATE: We need all the help we can get. It`s tough watching TV knowing we`re getting beat 20 to 1 in television spending. This is an election where we see the electorate is ready to fire Scott Walker. We just need to make sure we`re ready to get our voters out to the polls.

SCHULTZ: All right. There`s a poll out there from some group called We Ask America. It gives Walker a nine-point lead. Should you trust these numbers? Who is We ask America?

I want our audience to understand, with so much money floating around it`s easy to get a few jokesters to play with the telephone and say look what we`ve got.

So, who is this group We ask America?

TATE: Earlier today, it`s reported it`s the Illinois Association of Manufacturers. One would wonder why the Illinois Association of Manufacturers has a strong interest in our governor`s race. For whatever reason, they do and they decided to do a poll. It`s a robopoll. I don`t think it`s an accurate reflection of we`re seeing internally and what we`re seeing released even as recently about a week ago.

This is a very competitive race. We are neck and neck in the polls. If we can get our voters to show up on June 5th, we`ll send a message nationally that you can`t mess with working people.

SCHULTZ: That`s what it`s all about is who gets out the vote. That`s what this is all about at this point. Who`s going to get out the vote to get the deal done on June 5th.

Now, I want to ask you -- did Scott Walker lie to Congress? I mean, the audio tape -- the videotape is right there. You saw his testimony in Congress. You saw the videotape that came off the documentary when he was talking to that billionaire.

How could you deny the fact? He lied to Congress, did he not?

TATE: I think it would be pretty hard to think he didn`t. I think it would be pretty hard a guy as manipulative and calculating as Scott Walker didn`t have a conversation about the devastating affect it would have for working people to have a voice in the workplace and in government.

I think that`s clearly why he did it. You know, Ed, you`ve done a lot of reporting on where this stuff comes from, from the Koch brothers, from ALEC -- they`re trying to take apart any semblance of a voice that average working people have by going after labor.

SCHULTZ: I hope the DNC does what they have to do, because this is important for the country. It`s important for the Obama administration.

Mike Tate, great to have you with us. Thanks so much. Keep up the fight.

Remember to answer tonight`s question there at the bottom of the screen. Share your thoughts on Twitter @EdShow. We want to know what you think.

President Obama spoke out about the JPMorgan mess. We`ll tell you what he said about the $2 billion risky bet.

And California Governor Jerry Brown wants to avoid massive cuts to education in public safety. The Republicans are standing in his way. Congressman John Garamendi joins me later.

Stay with us. We`ll be right back.

(COMMERCIAL BREAK)

SCHULTZ: Coming up, the human cost of Mitt Romney`s vulture capitalism. The Obama campaign has a new ad is hitting Romney pretty hard. One of Bain`s victims is here tonight.

Republicans are actually claiming that the JPMorgan disaster was caused by too much regulation? We will correct the record on this show this evening.

And governor`s like Chris Christie and other righties around the country are playing politics with people`s lives when it comes to implementing what they call Obamacare. Wendell Potter is ahead on the latest Republican obstruction.

President Obama is going after Mitt Romney where it counts. Romney claims to be the job creator. So, here is the Obama campaign`s ad about Romney`s experience at Bain Capital.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: They made as much money off of it as they could. They closed it down. They filed for bankruptcy without any concerns for the families of the community.

UNIDENTIFIED MALE: It`s like a vampire. They came in and sucked the life out of us.

UNIDENTIFIED MALE: It was like watching an old friend bleed to death.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: As I look around at the millions of Americans without work, it breaks my heart.

UNIDENTIFIED MALE: He`s running for president. If he`s going to run the country the way he ran our business, I wouldn`t want him there. He`s so out of touch with the average person many this country, how could you care. How could you care for the average working person if you feel that way?

(END VIDEO CLIP)

SCHULTZ: The ad tells the story of GST Steel. When Romney was at Bain Capital, the steel company was loaded up with debt and then sent into bankruptcy. Its workers lost their jobs and their pensions, were devastated.

The Romney campaign countered with its own ad about Steel Dynamics and how it was a big success under Bain Capital. The Steel Dynamics -- wait a minute now -- they got plenty of subsidies and tax breaks. Of course, this is Mitt Romney`s second time around trying to defend his private sector jobs record thanks to Newt Gingrich`s old super PAC.

(BEGIN VIDEO CLIP)

NARRATOR: This film is about one such raider and his firm. Mitt Romney became CEO of Bain Capital the day the company was formed. His mission: to reap massive rewards for himself and investors.

UNIDENTIFIED MAL: Mitt Romney, them guys -- they don`t care who I am.

UNIDENTIFIED MALE: He`s for small businesses. No he isn`t.

(END VIDEO CLIP)

SCHULTZ: Let`s turn to Dave Foster, a former union representative for laid off workers at GS Steel. Mr. Foster, good to have you with us. You were there. Tell us what happened to GS Steel under Romney`s Bain Capital. How did it unfold?

DAVE FOSTER, FORMER GST STEEL UNION REP.: Thanks a lot for having me here, Ed. I appreciate the opportunity to tell what happened to the steel workers, GST Steel in Kansas. This was a game of heads I win, tails you lose.

When Bain Capital went in in 1993 put very little of their own money down, borrowed the rest to buy the GS steel plant. They turned around and paid themselves back their own investment with borrowed money and proceeded over a course of years to lever the company up with unsustainable amounts of debts so that by the end of the 1990s, the company had $500 million in debt. It simply couldn`t survive. It was an example of terrible management on the part of the business.

SCHULTZ: OK. So when Mitt Romney is out on the campaign trail and he says it breaks his heart when he sees these unemployed people, you have a different opinion of that?

FOSTER: I have a completely different opinion, Ed. I was the person that went down in the union hall and stood with hundreds of steel workers with steel worker retirees and spouses in their 70s and 80s. I was the one to tell them the company was this bankruptcy, that their retiree health insurance, $100 million of it was gone. Their pensions were being reduced.

I heard their stories of how kids were dropping out of college, how pensioners didn`t know if they could get operations or leave money to their widow.

SCHULTZ: And Bain walked with the cash?

FOSTER: There was no one from Bain around.

SCHULTZ: OK. But they walked with the cash? I mean, they underfunded pensions. They changed benefits.

They made it so the company would go bankrupt. They took theirs and left you guys hanging.

FOSTER: That`s exactly right, Ed. When Bain bought GST steel, they bought it for cash and the assumption of obligations. Among those obligations was $100 million in accrued retiree benefits that were owed the hundreds of GST steel workers and those who have retired for them.

Romney walked in knowing he obligated to pay that money. But when the going got tough, he walked away and took his own quick profits up front and left the steel workers behind, cratered their jobs, cratered their community.

SCHULTZ: And now, you know the rest of the story.

Well, today, President Obama`s former economic advisor on the automobile industry, said that Obama`s Bain ad was unfair because it wasn`t Bain`s mission to create jobs. That really is the point isn`t it? What`s your response to that?

FOSTER: That really gets under my skin, Ed. The fact is you judge a businessman by the values and record of the businesses that they own and run. The case of GST Steel was one of an extremely poorly managed business.

It was one in which smart people in the steel industry know it`s a cyclical business. They know you don`t lever up a company like that with debt so in the hard times you can`t pay your bills. But that`s exactly what Mitt Romney did. It was bad management and a story of bad values.

SCHULTZ: David Foster, thanks for your story tonight here on THE ED SHOW. We`ll do it again. Thank you. Appreciate it.

Up next, what President Obama had to say about the nation`s biggest bank making a huge $2 billion bet that failed miserably?

Will the Democrats back Marco Rubio`s version of the DREAM Act? Not if it doesn`t include a path to citizenship. Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: Another bank debacle, another bank story.

Today, President Obama addressed the $2 billion loss the biggest bank suffered because of a risky bet gone bad?

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: JPMorgan is one of the best managed banks there is. Jaime Dimon, the head of it is one of smartest bankers we have, and they still lost $2 billion and counting -- precisely because they were making bets in these derivative markets. We don`t know all the details yet. It`s going to be investigated.

But this is why we passed Wall Street reform. This is the best or one of the best managed banks. You could have a bank that isn`t as strong, isn`t as profitable, making those same bets and we might have had to step in. That`s exactly why Wall Street reform is so important.

(END VIDEO CLIP)

SCHULTZ: The chief executive officer of JPMorgan resigned, but its chairman Jaime Dimon is still in damage control. Here he is on "Meet the Press."

(BEGIN VIDEO CLIP)

JAIME DIMON, JPMORGAN CHASE CEO: We made a terrible, egregious mistake, there`s almost no excuse for it. In hindsight, we took far too much risk, the strategy we had was badly vetted. It was badly monitored. It should never have happened.

(END VIDEO CLIP)

SCHULTZ: Well, why aren`t heads rolling? I mean, a lot of heads. I mean, there`s nothing to stop Jaime Dimon and JPMorgan Chase from going right back down the same road and do in this whole over again tomorrow. Because it`s perfectly legal.

It`s further proof that Dodd-Frank didn`t go far enough. When RNC chairman Reince Priebus was asked if we needed more regulation or less, here is what he said.

(BEGIN VIDEO CLIP)

PRIEBUS: I think we need less. I mean, the fact of the matter is Dodd-Frank didn`t work.

I mean, let`s cut right to the chase here. You have got the biggest banks doing whatever they want to do and until we break them up, it`s going to be business as usual, because the climate in Washington is there`s not going to be anymore regulation put on Wall Street.

What do you think?

BART CHILTON, CFTC COMMISSIONER: Well, Ed, in general, I think, you know, as regulators we were are sort of chumps. We keep thinking the banks are going to do what`s expected but really what we know they`ll do is only what`s inspected. That`s why we need to put the meat on the bones of Dodd-Frank.

They passed the law two years ago, but we still, two-thirds of the regulations aren`t even in place. So, the things that JPMorgan was going doing, as you say, they were totally legal, but regulators didn`t have a view of what it was. That needs to change.

SCHULTZ: All right. So, what can the CFTC do, if anything, right now about this? And I think it`s very little, am I correct there?

CHILTON: Well, I mean, they have done nothing illegal. I mean, all regulators will take a look at losses. I mean, it`s free enterprise. They can lose money.

The thing is, that sometimes these things can impact consumers, impact average customers, and these very large banks can have a residual impact on the rest of the economy. And heretofore, before Dodd-Frank, we had hundreds of trillions of dollars in trading in these over-the-counter markets, they call them. I call them "dark markets" as we talked about before. That was totally off of our radar.

So Dodd/Frank put that onto our radar, but we haven`t put the rules in place to actually get the reports from the banks, to actually look at these things, Ed. So we need to put the hammer down, put the regulations in place to protect markets and consumers.

By the way, I think it`s exactly the opposite of what the chairman said, the RNC chairman said. I think the Dodd/Frank law, it can actually help create jobs. It`s putting all sorts of space in between the regulation where there`s tremendous amount of competition. I see it happening all the time.

So we have to get these rules into place, one, to protect people, but also to fuel inject the economic engine of our democracy.

SCHULTZ: The irony here is that Jaime Dimon, who -- I want to play this soundbite. This is a guy who really led the fight against any kind of regulation whatsoever. And now here he is saying we were just a little bit sloppy. That`s all. Here is Jaime Dimon.

(BEGIN VIDEO CLIP)

JAMIE DIMON, JP MORGAN CHASE CHAIRMAN AND CEO: We support too big to fail. We want the government to be able to take down a big bank like JP Morgan, and it could be done. We think Dodd/Frank, which we supported parts of, gave the FDIC the authority to take down a big bank.

When it happens, I believe compensation should be clawed back. The board should be fired. The equity should be wiped out. And the bank should be dismantled and the name should be buried in disgrace.

(END VIDEO CLIP)

SCHULTZ: Whatever happened to boring banking, when the investments banks and the commercial banks, they were separated? Back in the time it was boring banking, we had Glass-Steagall, we wouldn`t have had to worry about this kind of stuff. He talks I think a very good game.

But when he was asked about this risky bet a few weeks ago, he said it was just a tempest in a teapot. It`s like he`s going to say whatever he can say until they get caught and something happens. Then he comes back and says, hey, we really did some bad stuff here. We got loosy goosy with the whole thing.

So one person`s let go. Bernie Sanders has been on this for a long time. He said today "the New York Fed is in charge of both regulating JP Morgan Chase and deciding whether or not to provide billions of dollars in virtually zero interest loans to this too big to fail institution, if it needs another bail out. This is a clear example of fox guarding the hen house."

Amen. I mean, unless these big banks are broken up, I don`t know how this problem is ever going to be solved. And it`s going to take Congress. And guess what, the banks own the Senate. Your response, Mr. Chilton?

CHILTON: Well, there are ten lobbyists, final lobbyists, Ed, for every single member of Congress. So they have a big, heavy influence. It`s the consumers who don`t have the big influence in Congress. But the one thing that Dodd/Frank did -- I mean, it did a bunch of things that were very good. But one thing that JP Morgan and Mr. Dimon themselves argued against was this Volker Rule.

Not to get into the weeds, but essentially it would go back pre-Glass-Steagall. That is, if you`re a bank, you`re a bank and you look out for your customers. Right now, what we allow, because we did away with this Glass-Steagall law, is that there`s a troublesome duplexity within the banking industry.

They`ve got their own interest, their bottom line, and they`ve got their customers. We know who is always going to win out. As a matter of fact, we have seen it. Goldman Sachs and Citibank set up these fake out funds. They set up funds. They pushed their customers into it. Then the banks took the other side of it.

And they have been fined. They`re having settlements. There -- people are getting in trouble for it. But again, back to what I said at the beginning, we can`t just expect that the banks are going to do something. They need to be inspected to ensure they are upholding the law and protecting markets and consumers alike.

SCHULTZ: Betting against house money, where you know where all the cash is. It`s amazing. Bart Chilton, great to have you with us tonight. Thanks so much.

There`s a lot more coming up in the next half hour of THE ED SHOW. Stay with us.

SCHULTZ: The republican wrecking crew wants to claim another victim in California. But the governor is fighting back. California Congressman John Garamendi is here with reaction.

President Obama`s health care law is under attack in Republican state houses around the country. Tonight, Wendell Potter on how to stop the assault.

Senator Marco Rubio wants everyone to go along with his imaginary Dream Act. Tonight, Democrats are calling him out.

(COMMERCIAL BREAK)

SCHULTZ: This story is happening all over the country, but right now it`s in California. The world`s eighth largest economy is in big trouble. California faces deep cuts in education. Where have you heard that before? Public safety, social services, due to a massive budget gap. Now the state estimated a 9.2 billion dollar budget shortfall in January.

This weekend, it was revealed, well, that`s going to be 16 billion dollar gap. Tax collections were not as high as expected in April. Democratic Governor Jerry Brown wanted to extend the tax revenue levels from the Schwarzenegger administration, but Republicans blocked his efforts to put tax revenue on the ballot.

The California legislature is at a stand still. So, Brown took his pitch to the voters.

(BEGIN VIDEO CLIP)

BROWN: We can`t fill a hole of this magnitude with cuts alone without doing severe damage to our schools. That`s why I`m bypassing the gridlock and asking you, the people of California, to approve a plan that avoids cuts to schools and public safety.

(END VIDEO CLIP)

SCHULTZ: What the governor of California wants to do -- he is proposing raising the state sales tax by a quarter of a percent for four years. He also wants one to three percent increase on income tax for those earning more than 250,000 dollars a year. The rate increase would last seven years. Then it would sunset.

Without the tax revenue, the school year will be cut by three weeks. College tuition rates -- we`ve had a lot of talk about interest on loans -- would those rates would go up six percent. And funding for courts, well, that would be cut. There are also unspecified cuts to social welfare programs.

Republicans in Washington have -- they have run huge deficits on the unpaid wars, Iraq and Afghanistan, that were off budget, the tax cuts of the Bush years. Nobody figured out or added anything up on how that was going to affect the Treasury. And of course the hand outs to the pharmaceutical industry.

There`s no federal money to invest in the states. We are gutting our infrastructure in this country. The result is that what we`ve seen is happening in Wisconsin, Ohio, Pennsylvania, New Jersey, and other states across the nation, all where these Republican governors have been elected and hanging out.

Governor Brown has plan to avoid cutting vital services in California. But it requires everyone to share the pain. He`s at the table with the solution. Now it`s up to the people.

Joining me tonight is Congressman John Garamendi of California. John, great to have you with us. This is just playing out all over the country like this. We are shorting our infrastructure. We don`t have the money. The governors are even making the ruthless cuts or turning to the people. What`s going to happen here?

REP. JOHN GARAMENDI (D), CALIFORNIA: What`s going to happen is California is going to come back. California is going to do what it has to do to get back on track. Education is fundamental. It`s the most fundamental of every investment. I was with a bunch of venture capital folks in the Silicon Valley over the weekend. They are building new companies. They are looking for the next opportunity. In every case, they`re looking for workers. They want the people to work in their shops, in their new businesses.

So we need this education system. The governor is absolutely correct. We need a balanced approach. You cannot do it with cuts. You`re going to have to raise the tax revenue. His plan is out there. It`s the plan that we`re going to have to pursue.

SCHULTZ: Do you think the people of California will go down this road, of a quarter percent sales tax -- sales tax draws a lot of money fast. And of course, if you make over 250,000 a year, it would be three percent with a sunset on it.

GARAMENDI: Well, the three percent comes if you`re over a million adjusted gross income, per person. So for a family, it would be much higher. For 250,000, it would be a small percentage increase. But the point here is we have to do this. We have to move this state forward. That means you have got to make these investments in the fundamental ingredients of economic growth, education, infrastructure, research, manufacturing.

That`s where you generate the wealth. That`s how you generate the future.

SCHULTZ: I know that you want to be positive and you. And you are. You`re a positive guy. I`ve known you for a while and you`re business friendly. But 32,000 teachers in your state have been let go in the last year.

GARAMENDI: That`s correct.

SCHULTZ: We are in the middle of making decisions with our priority list in America right now. And every state is going through this. You can`t tell me that all 32,000 teachers were lousy.

GARAMENDI: No, they were very good teacher. My daughter`s a second grade teacher. Her class size went from 22 to 35. You tell me how a teacher in the second grade is supposed to get the kind of performance out of those kids. Very, very serious mistake being made here.

The governor has come forward with a proposal that would add about six billion dollars to the K through 12 system. Now you have to change the system also. You have to change and reform. Otherwise you`re going to get stuck in the mud.

California can do it. This nation can do it. But you`ve got to make the critical investments. You can`t do what the Republicans are doing in Congress with their austerity budget on steroids, while giving tax breaks to the super wealthy and letting the oil companies have our money, so they can even have a bigger profit.

We need good public policy here.

SCHULTZ: We`re getting our infrastructure in this country because we didn`t -- because of the Bush tax cuts, because of the unfunded wars, because of where we are. We`re borrowing money from China like crazy. So here we have -- we`re making these decisions to cut education, to cut -- and put it on the backs. They say that they are worried about the deficit and everything else because it`s going to affect the next generation.

They are affecting the next generation by shortchanging the infrastructure and their opportunity.

GARAMENDI: I heard some of these characters speak the other day. They are saying, oh, we got to protect the next generations; we can`t put the burden on them. I said, what about these kids? These kids are in school today. You`re taking away their ability to perform and to be productive tomorrow. Not the next generation, but the generation today needs that education.

They need the health care. They need the food. School lunch programs are being cut. Meals on Wheels for seniors. . This is not America. This is not the America we have. We need to invest in those things, in our kids, in our infrastructure, in manufacturing, in the research, make those investments.

You tell me one company out there, anywhere, that`s going to succeed by shortchanging its investments, its investments in research, its investments in manufacturing. That company will fail. And a country that fails to make those investments will also fail. We cannot let that happen.

SCHULTZ: Governor Brown is doing the right thing, asking the right questions?

GARAMENDI: He`s putting it to the California people. And he`s also putting it to America. We`ve got to make these investments.

SCHULTZ: Congressman John Garamendi, great to have you with us tonight. Thanks for joining us.

Senator Marco Rubio claims that he has big plans for immigration reform, but none of those plans include a path to citizenship. That`s next. Stay tuned. You`re watching THE ED SHOW on MSNBC. We`re right back.

(COMMERCIAL BREAK)

SCHULTZ: Mitt Romney believes the key to immigration reform is self-deportation. Now the man hoping to be Romney`s running mate, Senator Marco Rubio of Florida, is accusing the White House of sabotaging his reform efforts. The Dream Act offers children brought to the United States illegally by their parents a pathway to citizenship, if they go to college and serve in the military.

The legislation died in the Senate two years ago. And surprise, surprise, Republicans are still unwilling to cooperate. President Obama wants Congress to act now.

(BEGIN VIDEO CLIP)

HILDA SOLIS, SECRETARY OF LABOR: He`s ready and willing to sign a Dream Act, immigration reform act, if we can have cooperation on the other side of the aisle. I don`t hear any members except for Senator Rubio maybe coming forward talking about a proposal that`s half cooked.

(END VIDEO CLIP)

SCHULTZ: That half cooked proposal from Senator Marco Rubio of Florida doesn`t offer a path to citizenship. Instead, it offers non-immigrant visas. Even though Rubio has yet to put his idea on paper, the Tea Partier is accusing the White House of trying to sabotage him.

(BEGIN VIDEO CLIP)

SEN. MARCO RUBIO (R), FLORIDA: One of the things that`s already been documented is that the White House has been -- and the articles have been written, two or three now. The White House has been calling in Dream Act advocates and asking them, almost ordering them not to work with me on this issue, because they have been counting on using this issue as a wedge issue in October to drive up turn out.

(END VIDEO CLIP)

SCHULTZ: Already been document? Of course, Rubio offered no specifics to back up his allegations. Rubio is desperately trying to raise his national profile. He knows his party won`t go for immigration reform. The next test -- next best thing is to offer up a watered down plan and blame the Democrats for its failure.

But Majority Leader Harry Reid said he would be happy to work with Rubio.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D), MAJORITY LEADER: I`m glad that Marco`s doing something. I think that`s significant. But the problem is, right now, there has not been a single word put on paper, not a word. And remember in anything we do in life, the devil is in the details.

Let`s stop this nonsense of talking about it. He talks to one group this way, another group another way. Put it in writing.

(END VIDEO CLIP)

SCHULTZ: Ninety percent of the Latino voters support the Democrat`s version of the Dream Act. This could have a big impact on millions of lives. All Senator Reid needs is a few Republicans to step up to the plate and be on the right side of history.

(BEGIN VIDEO CLIP)

REID: I`ve got 90 percent of my Democrats. I need a handful of Republicans to work with me on this. I`ve spoken to the Dreamers. They do not want another failure. They do not want another failure.

SCHULTZ: Senator Rubio, put it on paper, dude. Tonight in our survey, I asked you do national Democrats need to do more to help recall Governor Scott Walker. Ninety seven percent of you said yes. Three percent of you said no.

Next up, Chris Christie is one of many governors, just the latest Republican governor, to stall on implementing the health care bill that was passed by Congress, the one they love to call Obamacare. What can be done? Wendell Potter will join me next. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: In the Big Finish tonight, the GOP is waging a full on assault on health care in this country. At the federal level, Republicans in Congress are trying to defund it. And at the state level, Republicans and legislatures are dragging their feet on implementing it.

Governor Chris Christie of New Jersey is just the latest Republican governor joining the club. Christie recently vetoed a bill from the Democratic state legislature that would have created a state health insurance exchange. The exchanges are a key part of the health care law because they expand access -- expand access to health insurance, which is a good thing.

The health care law will provide millions unable to get coverage through an employer with federal subsidies to buy a plan through the exchange. It`s going to get more people covered. Christie now says that he won`t act until the Supreme Court makes a decision.

It`s not just states with Republican governors that are in trouble. As the "Washington Post" reports, in states with Democratic governors, such as New Hampshire and Minnesota, it`s often Republican dominated legislatures that are causing the hold up. And in six states where Republicans hold both branches of government, including Kansas and South Dakota, state assemblies haven`t even considered laws to establish the marketplaces.

Millions of Americans are waiting to be helped by this bill that we spent so much time on as a country. And republican lawmakers are playing political games and hurting a lot of people. In the meantime, how many people will go in debt because of medical bills? How many people will go bankrupt because of it?

Republicans are literally playing politics with people`s lives. And it is mean-spirited to say the least.

Let`s turn to Wendell Potter, who is the Center for Public Integrity, and is a former communications director and vice president of Cigna and the author of the book "Deadly Spin."

This is obstruction at all levels. Mr. Potter, great to have you with us tonight. It`s mean-spirited. This is an all out assault to stop anything President Obama was able to accomplish. How else do we read it?

WENDELL POTTER, CENTER FOR PUBLIC INTEGRITY: There`s no other way to read it, because the exchanges are a no brainer. As you pointed out, they expand coverage. But they also enable the citizens of every state to be able to shop for coverage and compare policies one to another. You can`t do that now.

This was a great idea when Republican governors had it before the Affordable Care Act was passed. There`s an exchange in Utah. When Mitt Romney was governor of Massachusetts, he created an exchange there. It`s been very successful in both states. They had different approaches.

But what we`re seeing now is nothing but politics. They`re wanting to make sure that they can keep this going as political rhetoric as long as they can.

SCHULTZ: They are using obviously the Supreme Court to hide behind them. How long does it take to set up a good exchange to be implemented. If they -- if you get a favorable ruling, if the country gets favorable ruling on the health care bill from the Supreme Court, they would have, what, maybe five and a half to six months to set this up. Wouldn`t they?

POTTER: They would. And it`s not enough time. In fact, the Affordable Care Act requires states to be able to show by the first of January next year that they have taken enough steps to be able to get their exchanges up and running. If they haven`t, then the federal government will step in and run them for those states. And that undoubtedly will probably happen in a lot of states.

SCHULTZ: Which is going to cost a lot of money, isn`t it? More money than it would if the states did it.

POTTER: Exactly right. And you will have people far removed from the states calling the shots. So it`s not necessarily at all a good thing for the residents of the state. But these politicians are not thinking and acting in the best their citizens, by any means.

SCHULTZ: One of the reasons why the Republicans really don`t want this is because this -- they are so afraid that this is going to end up being the public action. Are they not?

POTTER: That`s one thing. I think it`s -- like you said, it`s more fundamental than that. They just want to use it as a campaign issue. They have done such a successful job of criticizing the Affordable Care Act and misleading people about it, that this gives them another campaign issue for a while.

SCHULTZ: And it -- so workers who work for company that don`t have health care benefits, this is their chance, through a state exchange, to get some coverage, to get a better outcome. And in the long haul, it will bring down expenses for the nation. That`s really the model that the exchange was all about.

POTTER: That`s right. Many people can`t get coverage through their employer because their employer doesn`t offer coverage. So it`s for individuals who are in that boat, but also for people who work for small businesses. More and more small businesses just simply cannot afford to offer coverage. This would enable more small businesses to be able to back into the business of -- or into the game of offering coverage to their employees.

SCHULTZ: And in the meantime, it`s depriving millions of Americans an opportunity to get coverage by stalling. They will do anything to get the victory.

Wendell Potter, great to have you with us tonight. Good to have you back on THE ED SHOW. Thanks so much. That`s THE ED SHOW. I`m Ed Schultz. "THE RACHEL MADDOW SHOW" starts right now. Good evening, Rachel.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.END

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